Although the Ukraine-Russia war has worsened the global semiconductor chip shortage and supply chain disruptions, rapid digitization across industries to enhance business operations, and a rising preference for IoT (Internet of things), AI (Artificial Intelligence), and cloud-based products and services, could aid the computer hardware industry's growth.
Furthermore, rising investments in smart city projects worldwide and continuing hybrid working trends could further augment the overall demand for computer hardware. The global computer hardware market is expected to grow to $1215.76 billion in 2022 from $1129.39 billion in 2021.
Given this backdrop, we think it could be wise to invest in fundamentally sound computer hardware stocks Toshiba Corporation (TOSYY), Lenovo Group Limited (LNVGY), and AstroNova, Inc. (ALOT).
Toshiba Corporation (TOSYY)
Headquartered in Tokyo, Japan, TOSYY and its subsidiaries provide electronic devices and storage solutions internationally. It operates through Energy Systems and Solutions; Infrastructure Systems and Solutions; Building Solutions; Retail and Printing Solutions; Electronic Devices and Storage Solutions; Digital Solutions; and Other segments.
Last month, TOSYY, Toshiba Digital Solutions Corporation (TDSL), and KT Corporation (KT) announced their collaboration on two pilot projects in South Korea using Quantum Key Distribution (QKD). The first project evaluates the quality of service (QoS) on a long-distance hybrid QKD network built with different QKD systems over an approximately 490km long optical fiber network between Seoul and Busan. The second project covers the testbed for an open QKD service (QKD-as-a-Service; QKDaaS*4) that aims to widen the quantum industry ecosystem in South Korea and abroad.
In January, TOSYY expanded its SCiB product offering with the launch of an innovative 20Ah-HP rechargeable lithium-ion battery cell that delivers high energy and high power at the same time. Toshiba drew on its expertise in current high-energy and high-power products to develop a new cell that combines the advantages of a high-energy battery and enables the vehicle to drive further on a single charge.
TOSYY's net sales increased 11.1% year-over-year in the third quarter ended Dec. 31, 2021, to ¥808.72 billion ($6.59 billion). Its net income increased 37.4% from its year-ago value to ¥55.12 billion ($449.27 million). Its cash and cash equivalents stood at ¥398.41 billion ($3.25 billion) for nine months ended Dec. 31, 2021.
Analysts expect TOSYY's revenue to increase 3914.40% year-over-year to $27.31 billion for its fiscal year ending March 31, 2022. The stock has gained 14.5% in price over the past year and 7.1% over the past month.
TOSYY's POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
TOSYY is also rated an A grade for Value and a B for Stability. Within the Technology - Hardware industry, it is ranked #9 of 45 stocks.
To see additional POWR Ratings for Growth, Sentiment, Quality, and Momentum for TOSYY, click here.
Lenovo Group Limited (LNVGY)
LNVGY, a Hong Kong-based investment holding company, develops, manufactures, and markets technology products and services. Intelligent Devices Group and Data Center Group segments are its two operational segments. The company offers commercial and consumer personal computers, servers, and workstations; and a family of mobile Internet devices that include tablets and smartphones.
Last month, LNVGY announced an expansion of its global partnership to develop and deliver scalable hybrid cloud solutions and edge computing implementations. Under this collaboration, Kyndryl and LNVGY will create joint solutions that employ automation, optimization, and differentiated IT infrastructure services to assist customers in meeting their mission-critical on-premises and cloud-based distributed application service needs.
For the third quarter, ended Dec. 31, 2021, LNVGY's revenue increased 16.7% year-over-year to $20.13 billion. Its operating profit increased 33% from its year-ago value to $932.00 million, while its profit increased 58.2% from its prior-year quarter to $682.00 million. The company's EPS rose 59.7% year-over-year to $4.92.
Analysts expect LNVGY's revenue to increase 11.8% year-over-year to $17.48 billion in the fourth quarter, ended March 31, 2022. The stock has gained 15.1% in price over the past month.
LNVGY's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Value and a B for Growth and Stability. In the Technology - Hardware industry, it is ranked #4.
In total, we rate LNVGY on eight distinct levels. Beyond what we have stated above, we have also given LNVGY grades for Momentum, Quality, and Sentiment. Get all the LNVGY ratings here.
AstroNova, Inc. (ALOT)
ALOT in West Warwick, R.I. designs, develops, manufactures, and distributes specialty printers and data acquisition and analysis systems worldwide. It operates through two segments: Product Identification (PI) and Test & Measurement (T&M). The PI segment provides tabletop and production-ready digital color label printers and specialty OEM printing systems under the QuickLabel brand. In contrast, the T&M segment offers airborne printing solutions, such as ToughWriter, which is used to print hard copies of navigation maps and other air traffic control data.
In the third quarter, ended Oct. 30, 2021, ALOT's net sales increased 3% year-over-year to $28.86 million. Its gross profit grew 6.7% from its year-ago value to $10.39 million over the period. The company's cash and cash equivalents stood at $8.73 million for the nine months ended Oct. 30, 2021.
Analysts expect ALOT's revenue to increase marginally year-over-year to $29.69 million for the fourth quarter, ending Jan. 31, 2022. The stock has gained 11.9% in price year-to-date and 14.7% over the past three months.
ALOT's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. ALOT is also rated an A grade for Value and Sentiment and a B for Momentum. In the Technology - Hardware industry, it is ranked #1.
In total, we rate ALOT on eight distinct levels. To see additional POWR Ratings for Growth, Quality, and Stability for ALOT, click here.
TOSYY shares were trading at $20.40 per share on Tuesday morning, down $0.04 (-0.20%). Year-to-date, TOSYY has declined -0.29%, versus a -3.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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